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House Republicans hopeful on Fannie, Freddie changes

Republicans on the House Financial Services Committee said Tuesday that they were hopeful Congress could make progress on reforming mortgage companies Fannie Mae and Freddie Mac during the 113th Congress, and blasted the Obama administration for failing to act on the issue.

“The administration did come to us in April ... and then we never heard from them again,” Rep. Shelley Moore Capito (R-W.Va.), who chairs the Financial Services Financial Institutions and Consumer Credit Subcommittee, said at POLITICO Pro’s P2012 Policy and Politics Financial Services Luncheon. “They sort of disappeared, which was very unhelpful.”

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Rep. Scott Garrett (R-N.J.), the top Republican on Financial Services' capital markets subcommittee, which has jurisdiction over Fannie and Freddie, said he was “hopeful” that Republicans and Democrats could come together next Congress to come up with a comprehensive plan to reform the government-sponsored enterprises.

“We know for a fact that we’ve lost money with the GSEs,” he said, noting the total loss has been more than “all of the other bailouts combined.”
Garrett has long been a supporter of creating a private housing marketplace.

A Democratic member of the panel, however, sounded less optimistic.

“I’d be very surprised if we saw significant changes,” said Rep. Brad Miller (D-N.C.), who chose not to run for reelection in 2012. “The factions on what to do about Fannie and Freddie are pretty much irreconcilable.”

Housing reform is expected to be one of the key issues that the powerful Financial Services panel tackles next year. Incoming Chairman Jeb Hensarling (R-Texas) has been an advocate of overhauling the mortgage giants — an idea that has drawn criticism from across the aisle as well as some member of his own party.

Rep. Maxine Waters (D-Calif.) — who will replace retiring Rep. Barney Frank (D-Mass.) as the committee’s highest-ranking Democrat, has called the idea of gradually privatizing the government-sponsored enterprises “unrealistic.” She has also made clear that housing reform will be one of her top priorities in the 113th Congress.

Capito did caution Tuesday that winding down or privatizing the GSEs “doesn’t come without consequences.”

“We have to be careful,” she said. “There’s a lot of moving pieces .... We need to approach this cautiously.”

This article first appeared on POLITICO Pro at 1:31 p.m. on December 11, 2012.